What’s Proposition G? You may have heard of a new proposition that’s going to be on our November ballot this year. If approved, Proposition G will impose a higher transfer tax on people who sell certain residential property within five years of purchase. The tax would increase to 24 percent in those first five years, and then drop to 14 percent after five years. The proposition was developed partially out of a tenant rights convention earlier this year and is backed by supervisors John Avalos, David Campos, Jane Kim and Eric Mar.

It’s an understatement that Bay Area dwellers are passionate about housing in the City and the surrounding areas, so the topic is of course contentious. Tenant activists in favor of the proposition argue that it is an actionable move toward protecting vulnerable tenants. And those opposing Prop G suggest it may further increase prices (due to lowering supply) and that the measure ought to include exemptions for other circumstances that might demand a sale of a recently purchased property.

Specifically, many REALTORS® are concerned that the tax is not based on the profit made on a sale, but levied against the full sale price. For example, on an $800,000 sale that took place within five years of purchase - the tax would amount to $192,000. Many agents argue that this could amount to a massive loss to sellers who need to sell for reasons that have nothing to do with speculation, potentially prompting a new surge of properties given up in foreclosure.

@ Margaret: And that's on top of the transfer tax already in place. The supervisors supporting the measure are in heavily tenant occupied districts. Go figure. They want to penalize "flipping" on 2 to 30 unit buildings. Unfortunately, this particular proposal will limit the already tight inventory as it is, driving prices up even higher. They just don't get it. There are better ways to approach the loss of affordable rentals. This isn't one of them.

Posted by David Ames, San Francisco (Zephyr Real Estate, San Francisco) over 3 years ago